Turkey’s housing market is heading into 2025 with an unusual mix of strong buyer activity, weak real-term prices and big expectations pinned on future interest rate cuts. Domestic buyers have become the engine of demand, even as foreign purchases continue to cool after hitting a peak in 2022. A new analysis by Global Property Guide shows a market that is energetic on the surface but still weighed down by inflation, high borrowing costs and the after-effects of economic shocks.
The headline trend is clear: nominal home prices are still rising, but inflation is rising faster. That means properties are actually losing value in real terms, although the pace of decline has started to slow. Data from the Central Bank of the Republic of Turkey shows the Residential Property Price Index rose 32.82 per cent year-on-year in July 2025. But once inflation is factored in, that turns into a 0.52 per cent drop.
Across Turkey’s three biggest cities, the picture varies. Ankara stands out as the only major market where prices are still rising in real terms, with a 42.91 per cent jump translating into a 7 per cent gain after inflation. Istanbul recorded a 33.54 per cent increase, which leaves prices more or less flat. Izmir trails further back, with a 30.99 per cent rise that converts into a real-term decline of nearly 2 per cent.
Nationwide, the average price per square metre is now TRY 39,697 (around USD 1,025), up 22.4 per cent from last year. Istanbul remains the most expensive market, with prices touching TRY 63,125 per sq. m. Ankara is seeing the fastest growth. Muğla continues to command a premium thanks to limited land supply, zoning restrictions and steady demand for high-end coastal homes from affluent domestic and foreign buyers.
Developers and investors expect nominal prices to rise further this year, but real-term growth hinges almost entirely on what happens with interest rates and inflation. A survey by the Housing Developers and Investors Association shows more than three-fourths of industry respondents expect prices to keep rising through the year. Some analysts believe prices could jump by as much as 50 per cent in the second half of 2025 if borrowing costs come down. Others expect any meaningful recovery to begin only in 2026, when interest rates could return to levels that encourage home buying again.
To understand how the market got here, it helps to look back. Turkey’s housing sector enjoyed a long boom from the mid-2000s to 2017, powered by rapid urbanisation, massive construction activity and strong domestic demand. Prices soared, millions of new apartments came up and rising household incomes supported higher buying power.
But the landscape shifted from 2018 onwards. Sharp swings in the value of the lira, economic slowdowns and raging inflation created huge volatility in nominal prices. In many years, inflation-adjusted prices turned negative. Between 2020 and 2022, property became an inflation hedge for many households, driving demand even higher, though the gains were not evenly spread across regions.
The 2023 earthquakes triggered another major shift, accelerating rebuilding in several provinces and reshaping demand patterns across the country. At the same time, high interest rates pushed mortgage-financed sales to their lowest levels in years, only to create brief spurts of activity whenever credit conditions eased.
Through all this, domestic buyers have held the market together. Between January and July 2025, Turkey recorded 834,751 home sales, up a strong 24.19 per cent from last year. Second-hand homes dominated with a 70 per cent share. Mortgage sales, which had been stagnant for months, almost doubled with a 93 per cent rise despite high interest rates.
Developers say renting has become costly enough to push many households toward ownership. Some call it “demand turning into necessity,” as buyers worry that waiting any longer will only become more expensive.
Foreign demand, however, continues to decline. Only 11,267 homes were sold to international buyers in the first seven months of 2025, a 12 per cent drop. Their share of total sales has shrunk sharply from the 2022 peak. Russians remain the biggest group of foreign buyers, followed by Iranians, Ukrainians, Germans and Iraqis. Industry leaders cite rising prices, tougher residency rules, competition from other countries and sluggish visa processes as key reasons for the fall.
On the supply side, the situation is improving. New building permits are rising at the fastest pace since 2017. In the first half of 2025, nearly 461,000 units received permits, up 28 per cent from last year. Most of these are large multi-dwelling projects. This is an encouraging sign for the market’s long-term health, as Turkey needs around 800,000 new homes a year to keep up with demand. Actual completions, however, are still flat, suggesting that the supply pipeline will take time to translate into ready-to-move homes.
Affordability remains the toughest challenge. High construction costs, expensive financing and stagnant household incomes are squeezing buyers. Policymakers are preparing a massive social housing programme set to launch in late 2025, targeting 500,000 affordable units across all provinces. Rental housing schemes are being planned as well for households that cannot yet enter the ownership market. The hope is that these steps will ease pressure and help match demand with supply in a more sustainable way.
As things stand, Turkey’s housing market is active, but the numbers tell a story of a country trying to balance inflation, affordability and ambition. If credit becomes cheaper and inflation eases, 2025 could mark the beginning of a more stable phase. If not, the market may continue to sprint in nominal terms while walking in real ones.
